S&P affirms BBB+/A-2 rating on Deutsche Bank
S&P Global Ratings said that it affirmed its 'BBB+/A-2' counterparty credit ratings on Deutsche Bank AG. The outlook is negative. S&P said: "The rating affirmation reflects our assessment of the amount that Deutsche Bank is likely to pay to settle civil claims brought by the U.S. Department of Justice related to issuance and underwriting of residential mortgage-backed securities in 2005-2007. Deutsche Bank announced on Sept. 15, 2016 that the DoJ's opening position in the settlement negotiations was a $14B demand, and added that the DoJ had invited the bank to submit a counter proposal. Deutsche Bank reported EUR5.5B of litigation provisions on June 30, 2016, and identified a further EUR1.7B unreserved contingent litigation liability...We assume in our capital and earnings projections that Deutsche Bank's RMBS settlement will be materially smaller than the DoJ's $14 billion initial negotiating position. This assumption takes account of penalties and consumer relief paid by peers to settle similar litigation cases with the DoJ. Our projections also consider other outstanding litigation cases, which include U.K. and U.S. investigations into suspicious trades in Russian equities and investigations regarding compliance with U.S. sanctions and embargoes."